National Blog

Welfare for the rich disguised as welfare for the poor

It is an old DC-trick to disguise corporate welfare as "compassion" by creating programs that provide taxpayer money to poor people, who are then required to spend the money buying goods from politically powerful businesses. For example, the federal food stamp and Women's, Infant, and Children's (WIC) programs were actually designed to create markets for agriculture producers.

I have first-hand experience with this as, during my first few years working on the staff of then-Congressman and current Campaign for Liberty Chairman Ron Paul, I handled his work on the Education and Workforce Committee. One of the issues the Committee dealt with was WIC reauthorization.

When the Committee was drafting the bill, most staffers paid more attention to the concerns of the food industry lobbyists than to the poor women who were the program's supposed beneficiaries. One staffer even told me directly that "this is about helping agribusinesses, not feeding poor people."

As Congressman Paul put it in his dissenting views (scroll down to the bottom of the link for all of Dr. Paul's comments):

According to the Congressional Research Service, food vendors participating in WIC received $9.86 billion in Fiscal Year 1997--75% of the total funds spent on the WIC program! This fiscal year, producers of food products approved by the federal government for purchase by WIC participants are expected to receive $10 billion in taxpayer dollars! Small wonder the lobbyists who came to my office to discuss WIC were not advocates for the poor, but rather well-healed spokespersons for corporate interests!

Anyone who doubts that these programs serve the interests of large corporations should consider that one of the most contentious issues debated at Committee mark-up was opposition to an attempt to allow USDA to purchase non-quota peanuts (currently the only peanuts available for sale are farmers who have a USDA quota; all other farmers are forbidden to sell peanuts in the US) for school nutrition programs. Although this program would have saved the American taxpayers $5 million this year, the amendment was rejected at the behest of supporters of the peanut lobby. A member of my staff, who appropriately asked why this amendment could not pass with overwhelming support, was informed by a staffer for another member, who enthusiastically supports the welfare state, that the true purpose of this program is to benefit producers of food products, not feed children."

Another example of corporate welfare disguised as aid to the poor is the foreign food aid program. Under the law, all the food purchased by the government for distribution has to come from domestic producers and be shipped overseas on US ships. The Obama Administration proposed using a portion of the food aid funds to buy locally produced products on the grounds that this would be a cheaper and more effective way of providing aid. The Senate rejected this rare attempt at fiscal responsibility from Obama. According to my Capitol Hill sources, it was after fierce lobbying from the shopping industry.

Representative Ed Royce offered an amendment to the Farm bill requiring that at least 45% of foreign food aid be used to purchase food from locally produced sources. This amendment was defeated by a vote of 203-220.

Of course, rent-seeking and cronyism are inevitable whenever politicians and bureaucrats take responsibility for providing charity away from private charities, religious institutions, and individuals.